Majority Owner of Santa Ana’s Micro D Seeks Remaining Stock

A Nashville firm that owns 59% of Micro D, the nation’s leading wholesale distributor of microcomputer products, on Wednesday offered to pay $37 million for the rest of the Santa Ana company.

Ingram Industries Inc. offered to pay $12.50 a share in cash to acquire the 41% of Micro D’s 7.2 million shares outstanding that it doesn’t already own. Ingram asked Micro D’s board to respond to the offer by Dec. 19.

Micro D officials estimate that the company has captured 15% of the $3.7-billion U.S. microcomputer distribution market, up from 8% three years ago. Micro D reported sales of $352.5 million in 1987, and analysts expect the company’s sales to top $525 million this year.

Ingram has owned a controlling interest in the fast-growing company since 1986, when it bought the stock of Micro D founder Lorraine Mecca, who left the company that year.

Ingram is a private holding company with interests in inland marine transportation and book, magazine and videotape distribution.

The firm also is also a major distributor of microcomputer products, with estimated sales of more than $200 million. A merger of Ingram’s computer distribution business with Micro D’s operations would give the combined firm a market share in excess of 20%.

A source close to Micro D said that Ingram has been frustrated by the fact that it is Micro D’s majority owner but does not control the the company’s affairs. Ingram representatives hold three of Micro D’s seven board seats.

Micro D Chairman Linwood A. Lacy Jr. has resisted Ingram’s attempts to gain more control over the company on the grounds that Ingram also owns a competing microcomputer distribution firm, the source said.

“We believe that our merger proposal is an attractive and fair one for Micro D shareholders,” said E. Bronson Ingram, president of Ingram Industries, in a prepared statement.

If the deal is completed, Ingram said it would merge Micro D with its Buffalo, N.Y.-based microcomputer distribution subsidiary, Ingram Computer, Lacy said. However, Ingram said it expects Micro D’s operations to continue at their present locations.

Offer ‘a Surprise’

Lacy said in an interview that the Ingram offer was “a surprise.” He said the proposal will be considered by a special committee composed of independent members of the Micro D board, with the assistance of independent investment bankers and counsel.

Lacy said the proposed price will be the subject of “careful scrutiny by the special committee.”

Micro D stock closed unchanged Wednesday at $10.50 per share on the over-the-counter market. Ingram announced its offer after the close of trading.

For the 9 months ended Sept. 30, Micro D reported earnings of $5.5 million, up 41% over the year-earlier period. Revenue soared 56% to $380.1 million.

Micro D, which has benefited from brisk sales in the microcomputer industry this year, employs nearly 500 people and has added about 100 jobs during the past 6 months.